Sub-$250 Smartphones to Account for 46 Percent of Smartphone Shipments by 2018

Smartphones that cost under $250 are expected to increase in popularity by 2018 as feature phone users shift to carrying a smartphone. ABI Research recently published a report that suggests manufacturers will ship 788 million such devices in 2018, 46 percent of all smartphones, up from 259 million devices priced under $250 that will be shipped this year. That doesn't mean high-end smartphones that cost more than $400 and mid-range devices priced below $400 won't cease to be popular, however. ABI Research said those segments are expected to represent 925 million shipped units in 2018, up from 635 million this year.

"As the feature phone segment continues to lose its battle for relevance, the low-cost smartphone has become the tool for operators seeking to drive increased data revenues," ABI Research senior analyst, Michael Morgan, said. Carriers and manufacturers can target the lower-cost phones at consumers who are still using feature phones, which means carriers can also start gaining added revenue from the data services that are required with a smartphone purchase.

"As smartphone penetration moves from early adopters to mass-market and laggard consumer segments, the smartphone as a product will be less dependent on technical superiority, and more dependent on reliability and value," ABI Research senior practice director, Jeff Orr said. The company also said that the focus on high-end smartphones will turn to reliability over "technical superiority." We've already seen a bit of this shift as companies begin to put a greater focus on software and services.

Low-cost Smartphones to Account for 46% of Smartphone Shipments by 2018—up from 28% in 2012

Oyster Bay, New York – 22 Apr 2013

In many parts of the world, smartphone shipments account for a larger percentage of mobile handset shipments than feature phones and low-cost handsets. Yet within the smartphone class of devices, segmentation is increasing to three price tiers (low, mid, and high). Shipments of sub-US$250 low-cost smartphones will grow from 259 million in 2013 to 788 million in 2018, according to recent Market Data from market intelligence firm ABI Research. Mid (sub-$400) and high ($400+) cost smartphone shipments are expected to grow from 635 million to 925 million over the same period.

"As the feature phone segment continues to lose its battle for relevance, the low-cost smartphone has become the tool for operators seeking to drive increased data revenues," says senior analyst, Michael Morgan. The growth of smartphones in pre-paid and emerging markets will be the primary driver of low-cost smartphone growth. Developed and subsidized markets are also finding that low-cost smartphones can capture the remaining consumers that have yet to convert to a smartphone while minimizing the margin impacts stemming from subsidizing high-cost smartphones.

Mid- and high-cost smartphones will continue to play an important role for operators looking to seed their customer base with the most advanced smartphones. Premium smartphones tend to carry the most advanced wireless connectivity and operators who are upgrading their network want to ensure that the handsets running on their network can deliver the best possible experience and customer satisfaction. "As smartphone penetration moves from early adopters to mass-market and laggard consumer segments, the smartphone as a product will be less dependent on technical superiority, and more dependent on reliability and value," adds senior practice director, Jeff Orr.

These findings are part of ABI Research's Mobile Handset Markets Database, which includes files detailing smartphone and mobile handset shipments, forecasts, and market share.

ABI Research provides in-depth analysis and quantitative forecasting of trends in global connectivity and other emerging technologies. From offices in North America, Europe and Asia, ABI Research's worldwide team of experts advises thousands of decision makers through 70+ research and advisory services. Est. 1990. For more information visit www.abiresearch.com, or call+1.516.624.2500.